U.S. High Court to Review L.A.’s Cable TV Policy

The Supreme Court, responding to an appeal from Los Angeles that could affect television viewing nationwide, agreed Tuesday to decide whether a community can grant exclusive franchises to cable TV companies to operate within its borders.

The justices will review a federal appeals court decision that extended constitutional protection to cable operators for the first time, saying that the exclusive franchises granted by Los Angeles and other cities would violate the First Amendment when there was capacity for additional systems.

Government has long held wide authority to regulate television and radio stations--in contrast to print media--because of the scarcity of broadcast channels. The appellate court refused to accept the contention that cities could exercise the same sweeping control over cable systems.

It said that the utility poles that carry cable TV lines are “a type of public forum” and that limiting access to only one cable firm would be akin to limiting street-corner newspaper vending machines to one publisher.

The justices’ ruling, expected by next spring, could have broad effect: 38 million cable TV subscribers are served through 6,900 municipally regulated cable systems, most of them the only systems in their areas.

New Constitutional Right

In their appeal to the high court, Los Angeles officials, joined by other California cities, said the appellate court ruling could significantly undermine the ability of governmental authorities to regulate cable TV systems and make sure that entire communities are served with diverse programming.

In essence, the city said, the appeals court created a new constitutional right to operate a commercial cable television system that was “on a par with the right to speak in parks, streets and other public areas.”

Lawyers for the cable firm that challenged the Los Angeles regulatory plan contended, however, that exclusivity creates artificial monopolies and that communities could benefit if there is added competition among cable systems. Society would gain in an “unfettered marketplace of ideas,” they said.

The city has required cable companies to bid for the exclusive right to serve 14 regions within its borders. Bidding firms must post several fees and agree to make channels available for governmental, educational and public-access programs. The city then auctions the right to become the single franchise in a region.

The case (City of Los Angeles vs. Preferred Communications Inc. 85-390) arose after the city awarded an exclusive franchise for an area in South-Central Los Angeles to Sun Cable Inc. Another firm, Preferred Communications, sought to use the surplus capacity on poles in the area. Denied permission, the firm filed suit against the city.

Upheld on Appeal

A federal district judge threw out the suit, but last March the U.S. 9th Circuit Court of Appeals in San Francisco upheld Preferred Communications. Although governmental authorities could make cable firms meet certain requirements, the appeals court said, they must have substantial reasons to limit access to just one firm. The court stopped short of ordering the city to grant the company a license but sent the case back to federal district court, where additional evidence could be offered at trial.

The appellate ruling cast considerable doubt on the constitutionality of a 1984 federal statute in which Congress gave communities new legal rights to regulate cable TV. One provision of the law gave authorities the right to grant “one or more franchises.”

Los Angeles officials urged the justices to uphold the statute, saying that it had helped bring order to the chaos of a burgeoning cable industry. The law “clearly allows” exclusive franchises, the city said.

Cable industry leaders welcomed the possibility that the justices might uphold some form of constitutional protection for cable firms. Such protection, for example, could weaken the ability of cities to control cable programming and give cable firms more bargaining power in negotiating agreements with governmental authorities.

James P. Mooney, president of the National Cable TV Assn., said that “if the Supreme Court wants to take a look at cable’s First Amendment rights, then I think we have a good case to make.”

Some industry sources discounted the likelihood that a ruling striking down exclusive franchises would result in a rush of competitors for existing franchises. Such firms--whether they enjoy formal exclusivity or are merely the only ones currently authorized to operate in an area--already have made substantial investments and signed up viewers, these sources noted, and other firms may well find it too late and too expensive to challenge established companies.